Answer:
1.
(a) is the Actual Manufacturing Overhead Expense incurred for the year.
(b) is the Manufacturing overhead applied to Work in Process for the year.
(c) is the Cost of goods manufactured for the year.
(d) is the Cost of goods sold for the year.
2. Journal Entry:
Debit Cost of Goods Sold $81,408
Credit Manufacturing Overhead $81,408
To close the underapplied overhead to cost of goods sold.
3. Journal Entry:
Debit Work in Process $4,992
Finished Goods $12,672
Cost of goods sold $63,744
Credit Manufacturing Overhead $81,408
To close the underapplied overhead to the 3 accounts.
Explanation:
a) Data and Calculations:
1. T-accounts:
Manufacturing Overhead
Debit Credit
a) 488,448 (b) 407,040
Bal. 81,408
Work in Process
Debit Credit
Bal. 9,960 (c) 758,000
302,000
91,000
(b) 407,040
Bal. 52,000
Finished Goods
Debit Credit
Bal. 38,000 (d) 664,000
(c) 758,000
Bal. 132,000
Cost of Goods Sold
Debit Credit
(d) 664,000
2. Distribution of overhead applied to production:
Work in Process, ending $ 24,960
Finished Goods, ending 63,360
Cost of Goods Sold 318,720
Overhead applied $ 407,040
3. Allocation of Underapplied:
Work in Process, ending $4,992 (24,960/407,040 * 81,408)
Finished Goods, ending 12,672 (63,360/407,040 * 81,408)
Cost of Goods Sold 63,744 (318,720/407,040 * 81,408)
4. The Underapplied overhead is $81,408. This figure is stated as the balance on the Manufacturing overhead account. It means that the applied overhead is less than the actual overhead incurred by $81,408.
